Which of these is not an advantage of the straight line method of depreciation? A
It is easy to work out due to a simple formula
Calculated once for all the years
Depreciation added to maintenance costs rise as the asset ages D
The cost of the asset is spread evenly through its useful life.
Which of the following is not correct regarding depreciation? A
It is due to the use of an asset
Is not incurred if the asset is not used
It is a portion of a long term expense
It is value which is used up.
Which method of depreciation is the best for showing the decline in value of the asset being proportional to the diminishing benefits as the asset gets older? A
Units of production
(a) Depreciation of non-current assets occurs due to the _______________ principle of accounting.
This principle requires that:
(b) List and explain two reasons for depreciation
(c) How is the cost of a depreciable non-current asset calculated? (d) List and explain three factors which are considered when calculating depreciation. QUESTION 15 – 8 marks
Tom Jones' operates a screen printing and design business. On 1 January 2013 he purchased a computer at a cost of $5 000 and a laser printer for $2 000. The computer is depreciated at 20% per annum on a reducing balance basis and the laser printer which has an estimated useful life of 6 years and an estimated residual value of $200 is depreciated on a straight line basis.
(a) What is the depreciation expense figure per annum for the printer? [1 mark]
(b) Show the General Journal entry for the purchase of the computer. [2 mark]
(c) Show the relevant ledger accounts to record the depreciation of the computer as at 30 June 2014. [5 marks]
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